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jstratt

jstratt
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  • How Low Can Oil Go? Signals Of A Bottom Are Flashing [View article]
    So far I have not seen evidence of a bottom in Oil prices. That is not to say that we havent had one, just that I have not seen evidence, yet.

    I suspect it will be clear when Oil has actually bottomed.
    Jan 26, 2015. 06:57 PM | 2 Likes Like |Link to Comment
  • Transocean: Value Trap Or Contrarian Pick? [View article]
    I will offer a view of Transocean for consideration.

    RIG is a dangerous investment at this time and could well drop into the single digits, but it will not go out of business.

    First I havent seen evidence of a bottom in Oil yet. It may have bottomed but a crushing high volume low hasnt happened. Further very few cutbacks have taken place. The history of Oil busts suggests much more pain to come and at least a period of significant cutbacks.

    When the cutbacks come, RIG will have more negative news. My view is that Oil stocks in general can not bottom until at least a couple of bad quarters are reported and probably more.

    I think RIG will be a great investment at some point in the future. My guess is that will be in single digits. More importantly the lowest risk investment in RIG will be after Oil reaches $70 again.

    We are in the disbelief stage for Oil. That is the period where everyone is convinced that Oil has no right to be this low and will probably jump soon. Historically Oil drops much farther than anyone thinks is possible and stays down much much longer.

    The bull case would be that we live in a time where the Government doesnt allow industries to fail like in the past. For me I think I will stick with the evidence from past Oil busts.

    In 1988 I was able to buy dozens of Oil companies for $2-$5 a share and less than 10% of their peak valuations. I am not predicting that however and find many reasons to think Oil will not stay low for much of a decade.
    Jan 26, 2015. 06:35 PM | 4 Likes Like |Link to Comment
  • General Electric Just Inked Its Largest Wind Deal Ever With China [View article]
    Blowin in the wind!

    The author continues to write positive articles with minimal or dubious information.

    I am not going to pretend I know GE to be overvalued at present. It was easier to see overvaluation last year. GE appears to be drifting along and it is hard to see GE growing while it is in the middle of a decade plus long restructuring where manufacturing assets are purchased at 3% a year while financial assets are sold off at a 3% rate.

    Investors should always ask why a company acts like it does to make sense of what is happening. I would submit that either GE doesnt really want to reduce its financial assets because in good times they are very profitable or the financial assets still have problems. Otherwise would it take a decade to sell some financial assets?

    Then one also has to ask if Alstrom and Oil and Gas assets are going to add to profits? I seriously doubt that! Yes with a $3 billion dividend from GE Capital added into EPS, GE reported a quarter that was probably slightly positive.

    What I do know is

    - The 10 year return on GE is -30% and the S&P +70.91% so clearly GE has been a disaster for shareholders over that period.

    - 6 years into a recovery GE has a 267% debt to equity and if another downturn comes it will suffer greatly again and your dividend would again be at risk. Note: $365 billion is a lot of debt

    - Is there really a reason to expect anything more than token growth from GE given a long term asset swap plan?

    There is risk in everything and I am really trying to counter pixie dust predictions rather than argue GE is poorly valued.
    Jan 26, 2015. 05:19 PM | 3 Likes Like |Link to Comment
  • Bristol-Myers Squibb: 2.4% Dividend, Impressive Pipeline, Approval Coming Soon [View article]
    Excellent article!

    I am trying to keep an eye on BMY because of a great pipeline and future prospects. At the same time certainly the pipeline has a lot of value associated with it in the share price.

    The strategy of waiting for a proper valuation is one I agree with. As an example GILD moved from potential drugs to blockbuster introductions in 2014. When results come in they will have doubled revenue and quadrupled sales. It almost would have been impossible to have a better year and yet the shares went up about 25% in 2014.

    My concern is that investors are placing so much value on potential that even with successful introductions the shares of BMY could drop. Not to consider if a failure actually occurred.
    Jan 25, 2015. 02:05 PM | 1 Like Like |Link to Comment
  • My Roth Conversion Odyssey (Part 2) [View article]
    Thanks for an interesting analysis and view. I would offer a few thoughts from my Roth conversion journey.

    I always made retirement contributions since I was old enough to qualify, but got serious about maximizing my retirement assets in early 2000s. So I realized that converting to Roth was a way to add additional money to my retirement assets.

    In Feb 2009 with the markets at a Dow 7200 level I converted about $80k to a Roth from my Traditional IRA. That tax conversion was a wonderful investment and the tax impact didnt seem all that much at the time. I havent calculated it exactly but the return on the prepayment of those taxes is well above 500%

    My view at the time became that at a minimum a 50/50 split of Roth vs Traditional IRA funds is important to try to achieve. The reasoning was that future US tax policy may change but Roth advantages to some degree are likely to endure.

    I like the 8 year plan but would also add that should the market drop, consider going all in. I think the additional taxes are spread across 2 years today and I did not find it difficult to pay those extra taxes. Certainly it has been one of my best ever investments.

    For those who can consider delaying SS to age 70 you should know that a guaranteed 8% inflation protected return for each year SS is delayed is also a good investment. Consider that eliminating the downside at a time you may not be at your peak financial capability, along with the potential for a very long life carefully.
    Jan 25, 2015. 12:46 PM | 1 Like Like |Link to Comment
  • 1.8% Dividend Union Pacific's Great Growth Keeps Continuing [View article]
    I own some UNP because it is a great long term investment. I would just say that UNP has had the wind at its back and I could probably buy more at a cheaper price in the future.

    I am not sure I see freight continuing to surge in an uninterrupted manner. At the same time I am not looking to sell.
    Jan 24, 2015. 11:29 PM | Likes Like |Link to Comment
  • 1.8% Dividend Union Pacific's Great Growth Keeps Continuing [View article]
    I will offer a comment on Boone Pickens. He lost a lot of money when he tried to takeover a Japanese company in the 1980s. As I recall he bought a controlling interest but by Japanese law the company management remained in charge and his money was just sunk for a huge loss.

    His next big surge I have heard came from marrying big money, maybe twice. Anyway Boone is likely facing huge losses and needs Oil to rise. Certainly not an unbiased source.
    Jan 24, 2015. 11:23 PM | Likes Like |Link to Comment
  • Verizon Reported Earnings: Where Do We Go From Here? [View article]
    I will add a few thoughts on VZ as an investment.

    - I think VZ bought the other 45% of the company from VOD at an attractive price. They now get to keep all of the profits of a very profitable business. The cost however did require a significant load of debt now over $100 billion.

    - The fundamental business is growing as indicated in the article and VZ has the best wireless network and wireline network (FIOS). FIOS is very expensive and largely is not going to go beyond densely populated high income areas that would be high dollar subscribers.

    - I moved away from T and VZ in 2011-12 but have moved back into VZ for a longer term return which I hope to be above 10% annually for the next few years. I view VZ as cheap at a 10.5 PE and believe that in spite of competition has the wind at its back. Will buy more below $46.

    - In short I see slight increases in users, much more usage per subscriber, internet of things adding significant future revenue and additional services over the top.

    - The dividend should protect the stock from heavy volatility.
    Jan 24, 2015. 11:06 PM | 1 Like Like |Link to Comment
  • Time To Sell The S&P 500 [View article]
    I just know that staying invested in quality growing companies has served me well throughout my life. Those who try to sell out when the wind blows the wrong way have a very poor record.

    If you are fortunate enough to have quality investments, consider hanging on to them.
    Jan 24, 2015. 07:39 PM | 3 Likes Like |Link to Comment
  • A Diversified, High-Income Bond Portfolio For 2015 [View article]
    I enjoyed the article and the analysis.

    It strikes me that the CEF would be a viable alternative for those who try to maximize income to meet retirement needs. Numerous investors try to purchase stocks that have high yields who might be much better off with the same return in a more balanced lower risk CEF.

    I have owned a Nuveen CEF in the past but I am not very knowledgeable on CEFs. A couple of questions I have include

    1) What is the load on the CEFs mentioned today?
    2) What happened to the income in 2008? ie did the CEFs miss or significantly reduce income as well as drop in value?

    I personally dont want exposure to high yield bonds at this time but suspect others could lower their risk for the return they need with CEFs.
    Jan 24, 2015. 07:14 PM | 1 Like Like |Link to Comment
  • AT&T's Comfy Status Quo Threatened By Google's Entry Into Wireless [View article]
    Thanks for an interesting article!

    I did gain an appreciation for MVNOs as a competitive threat. Still I like VZ in the $47 range or lower.

    As for GOOG, I stopped following them. They seem to invest in everything from biotech to drones, telephone etc. My experience and preference is to avoid companies that invest wildly in many different areas.
    Jan 23, 2015. 06:15 PM | 5 Likes Like |Link to Comment
  • Johnson & Johnson: No Real Earnings Growth Since 2007; And Don't Ignore Special Items [View article]
    I get where the author is coming from but the argument should be applied to so many other companies, rather than JNJ.

    JNJ has some growth challenges ahead of it. Still I think the 15.58 PE reflects that reality. When all is said and done the Health Care market will grow by 6-7% and JNJ with it. Add on the 2.8% dividend return and a 9% return isnt bad.

    If things get tough investors will pile into JNJ for its stability. When 2015 has come and gone it wouldnt surprise me if JNJ grew earnings 6% and sported an 18 PE.
    Jan 23, 2015. 05:47 PM | 1 Like Like |Link to Comment
  • 3 Attractive Biotech Picks For 2015 [View article]
    I felt someone was defending the $100 per share level in November and suspect it was GILD. It would not surprise me if most of the $5 bil was spent by the time of the earnings call. That would be about 3% of shares.
    Jan 23, 2015. 03:07 PM | 1 Like Like |Link to Comment
  • Farris to retire as Apache chairman, president, CEO; Christmann to take over [View news story]
    I missed this news when it came out.

    Some thoughts

    - The immediate retirement of an industry heavyweight like Farris is important news.

    - I could easily see an XOM and others bidding for APA and its Oil of over 1 billion barrels of proven reserves and Nat Gas of 7 Trillion cubic feet.

    - There is more to be written in this story
    Jan 23, 2015. 02:50 PM | Likes Like |Link to Comment
  • 3 Attractive Biotech Picks For 2015 [View article]
    So you would be surprised to find that GILD is the 5th best investment in the S&P500 year to date.

    I like historic innovation at a low valuation.
    Jan 23, 2015. 02:03 PM | 10 Likes Like |Link to Comment
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